S&P trims Fly Leasing

S&P said it downgraded its ratings for Fly Leasing Ltd. and its senior unsecured notes to BB- from BB. The agency also lowered the Fly Funding II Sarl’s and Fly Willow Funding Ltd.’s term loans to BB+ from BBB-.

“With the recent uptick in Covid-19 cases in many regions globally, and the resulting lockdowns and travel restrictions, we now expect a slower recovery in demand for air travel in 2021 than we previously foresaw, with global traffic and revenue of about 40%-60% lower than in 2019. With a more prolonged industry recovery outlook, we expect Fly’s earnings and credit metrics to remain weak through 2021 as it continues to work with lease deferral and restructuring requests and potential aircraft repossessions,” S&P said in a press release.

The agency said it now expects EBIT interest coverage to remain in the mid-1x area and funds from operations (FFO) to debt to stay in the high-single-digit percent area through 2021 (compared with 2.9x and 14%, respectively, in 2019).

The outlook is negative.

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